COLUMN(B31) results in 2 as B is the second column in the sheet . I have no idea why B31 is used instead of 2.
INDEX(Sheet1!$CD:$CD,COLUMN(B31) thus returns the second value it finds in column CD and proceeds with the IF condition

So in fact it says : IF the second value in column CD is "ok" then "y" otherwise "n".
It seems a bit far-fetched on it's own, but maybe put into context it is logical

Cheers

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